What Is My Accounting or Tax Practice Worth?

Accounting and tax practices have become a major M&A category. The recurring nature of tax and accounting work, combined with a massive wave of baby boomer CPAs approaching retirement, has created strong buyer demand at every size level.

Here's how accounting practice valuations work.

Typical Valuation Ranges

Accounting practices are most commonly valued as a multiple of annual revenue:

• Tax-only practices: 0.8x to 1.2x revenue
• Full-service practices (tax + bookkeeping + advisory): 1x to 1.5x revenue
• Larger CPA firms ($1M+ revenue with management depth): 1.3x to 2x+ revenue or 4x to 7x EBITDA for PE buyers

Factors that push toward the higher end:

• Diversified service mix (tax, accounting, advisory, payroll)
• Monthly recurring engagements (bookkeeping, controller services)
• Client retention above 90%
• Revenue spread across hundreds of clients
• Staff CPAs or EAs who manage client relationships
• Cloud-based systems (modern tech stack)
• Business clients (higher value than individual returns)

Factors that push toward the lower end:

• Tax-season-only revenue (January–April)
• Owner prepares most returns personally
• Individual-heavy client base (low revenue per client)
• Aging clients who are simplifying finances
• Paper-based or outdated systems
• No staff beyond the owner

Why Accounting Practices Are Attractive

Extreme recurring revenue. Clients return annually for tax work and monthly for bookkeeping. Retention rates routinely exceed 90%.

Demographic tailwind. Roughly 75% of CPAs are over 50. The profession is facing a succession crisis. Buyers are acquiring practices faster than new ones are being built.

Low capital requirements. Accounting practices require almost no inventory or equipment. Margins are high and cash flow is strong.

Scalable through technology. Cloud accounting, automated workflows, and offshore support have made it possible to service more clients per staff member.

Key Metrics Buyers Evaluate

Revenue Per Client

Higher revenue per client means fewer clients needed to sustain the practice. Business clients averaging $3K–$10K+ annually are significantly more valuable than individual returns at $300 each.

Service Mix

Monthly recurring services (bookkeeping, payroll, controller) are worth more than seasonal tax preparation. A practice with 50%+ of revenue from recurring engagements commands a premium.

Client Retention

90%+ annual retention is expected. Accounting relationships are sticky by nature — clients don't switch CPAs casually. But practices with deteriorating retention face discounts.

Staff Leverage

If the owner personally handles most client work, the practice is essentially a job being sold. Practices where staff CPAs and bookkeepers manage client relationships — with the owner in a review/advisory role — are significantly more transferable.

Technology Adoption

Cloud-based practices (QuickBooks Online, Xero, modern tax software, client portals) are worth more than paper-based operations. Technology adoption signals operational maturity and makes integration easier for buyers.

The Seasonal Revenue Challenge

Tax-heavy practices face a valuation headwind: 60–80% of revenue arrives in Q1. This creates cash flow lumps and makes the business harder to finance.

Practices that have smoothed revenue — through monthly bookkeeping, payroll services, and advisory engagements — are more attractive because they provide year-round cash flow.

How to Increase Your Practice's Value

1. Add recurring services. Convert tax-only clients to monthly bookkeeping, payroll, or advisory engagements. Even converting 20% of your client base smooths revenue significantly.
2. Shift toward business clients. Business clients generate 5–10x the revenue of individual returns and are stickier. Prioritize B2B growth.
3. Hire and develop staff. Adding a staff CPA or EA who manages their own client relationships is the single biggest step toward making your practice transferable.
4. Modernize your technology. Move to cloud-based platforms. Implement client portals. Automate workflows. Buyers will discount paper-based practices.
5. Document your processes. Engagement letters, workflow checklists, review procedures. A systematized practice sells for more.
6. Plan the transition. Introduce your successor to key clients 1–2 years before the sale. Relationship continuity is the buyer's top concern.

Ready to Find Out What Your Accounting Practice Is Worth?

Browse the valuation multiples guide for current industry data, or schedule a free call for a confidential assessment.